Yahoo Finance UK shoppers pay a third extra for EU goods amid Brexit red tape
Thousands of UK shoppers are paying up to a third extra for EU goods after being slapped with unexpected customs, VAT and delivery charges from the bloc.
European retailers are blaming Brexit red tape for delivery delays and the extra fees shoppers have to pay as British customers receive demands in order to release their goods from bonded warehouses on their arrival to the county.
Since the end of the Brexit transition period on 31 December, new rules introduced mean that VAT is required on EU purchases over £135 ($184). This should be collected at the point of delivery.
There may also be customs duties if the goods originated, or partly originated, outside the European Union.
According to the Times, delivery company DPD asked one shopper to pay £77 in tax and charges to release £245 worth of clothes purchased from a French website.
Customers have raised complaints that there is no indication that they will be liable for extra costs when checking out online.
Goods bought from the EU worth less than £135 are not liable for VAT at the point of delivery as the retailer should levy the tax and account for the sale to HM Revenue and Customs.
Delivery firms are also adding their own charges to cover the administration costs of collecting the taxes, the Times said. DHL charges 2.5% of the liable VAT and duty with a minimum fee of £11 while Royal Mail (RMG.L) charges £8.
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Haider Abdo, the chief executive of Returnado, a global returns management company, told the newspaper: “We spoke to one EU company that generates labels for shipping and they said 80% of their clients hadn't yet filled out the forms to meet the new requirements. That accounts for several hundred thousands of retailer shipments to the UK every month.
“Smaller retailers have been caught out because when it dropped over Christmas they were in their busiest point of the year.”
Delivery companies have increased the cost of sending parcels between the UK and EU even if no duty or VAT is due because of the extra bureaucracy. Anyone sending parcels from the EU to the UK needs to fill in forms including proof of origin and the reason for sending the package.
READ MORE: EU firms blame Brexit for delivery chaos as shoppers hit with extra fees
Retailers selling to the UK are now required to pay customs duties and fill out declaration forms, as well as register for VAT in the UK. VAT relief on imported goods under £15 have also been abolished.
TNT is charging £4.31 on all shipments to and from the bloc while rival UPS (UPS) is slapping £4.50 on every package. DHL (DPW.DE) is adding a €5 ($6, £4) levy per shipment.
So far, several companies have been hit by the disruption almost three weeks into the new arrangements.
A government spokesman said: “The new VAT model ensures ... that UK businesses are not disadvantaged by competition from VAT-free imports. The new system also addresses the problem of overseas sellers failing to pay the right amount of VAT when they sell goods in the UK. We anticipate this will bring in £300 million in tax every year to fund essential UK public services.
“Many EU businesses will have already registered for UK VAT under existing rules and HMRC is working very closely with those who haven't to ensure they can comply with the changes.”
Earlier this month, parcel delivery firm DPD said that it will suspend its road delivery services to Europe, including to Ireland due to Brexit.
The firm said that “complex” Brexit procedures are causing issues as a fifth of parcels are now being sent with "incorrect or incomplete" data, meaning they need to be returned.
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